RBS 2012 Annual Report Download - page 329

RBS GROUP 2012
327
Recruitment policy
The policy on the recruitment of new executive directors aims to structure
pay broadly in line with the framework and quantum applicable to current
executive directors, taking into account that some variation may be
necessary to secure the preferred candidate and to reflect the skills and
experience required. Any awards granted to replace awards forfeited on
leaving a previous employer will be on a comparable basis taking account
of anticipated performance outcomes and the proportion of time elapsed.
Full details will be disclosed in the next remuneration report following
recruitment.
The mix of executive directors’ remuneration
The charts below show the composition of remuneration opportunity for
on-target annual performance, with the long-term incentive awards shown
at median performance vesting. Annual incentive payments earned in
relation to 2013 performance will be deferred and will vest, subject to
satisfactory performance. The actual value of the long term incentive
awards will depend on performance over the period 2013 to 2015 and the
share price at the time the awards vest.
Group Chief Executive - Stephen Hester
Group Finance Director - Bruce Van Saun
2010-2012 average compensation outcome for Group Chief Executive
The preceding charts are based on target/expected values of total
compensation. Press commentary tends to focus either on these values,
or on maximum values assuming all performance conditions are met.
However, in practice over the period 2010 to 2012, the value received will
be significantly less than the maximum or even target value of incentives,
in light of waivers, performance conditions and share price changes over
the period. The chart below shows the likely average pay-out to the
Group Chief Executive over the 2010-2012 period.
The data shows that Stephen Hester is likely to receive just 22% of the
maximum value of his incentives awarded over the last three years, and
around 38% of his maximum total compensation. This is despite strong
progress against a range of financial and non-financial targets measured
over the three year period since 2010.
24%
32%
35%
Salary
Benefits
Pension allowance
On-Target Annual Incentive
(deferred into shares)
Long-term incentive award
(estimated value based on
median performance)
8%
1%
23%
30%
31%
8%
8%
Salary
Benefits
Pension allowance
On-Target Annual Incentive
(deferred into shares)
Long-term incentive award
(estimated value based on
median performance)
LTIP
Annual Incentive
Pension
Base Salary
2010-2012 Average Annual Total Compensation (£000’s)
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Maximum
award
Impact of LTIP
performance
conditions
Impact of annual
incentive
conditions/waivers
Impact of share
price
Likely
outcome
22% of
maximum
incentives
38% of
maximum total
compensation